GSK Annual Report 2002

38 GlaxoSmithKline Corporate governance
The Sarbanes-Oxley Act 2002
Following a number of corporate and accounting scandals in the
USA, Congress passed the Sarbanes-Oxley Act 2002 (Sarbanes-
Oxley) which took effect on 30th July 2002. Sarbanes-Oxley
establishes new or enhanced standards for corporate accountability
in the USA. A number of provisions of Sarbanes-Oxley apply to
GlaxoSmithKline because the company is quoted on the New York
Stock Exchange in the form of ADSs. Although the company’s
corporate governance structure is believed to be robust and in
line with best practice, certain changes were necessary to ensure
compliance with Sarbanes-Oxley.
As recommended by the Securities and Exchange Commission
(SEC), GlaxoSmithKline has established a Disclosure Committee.
The Committee reports to the CEO, the CFO and to the Audit
Committee. It is chaired by the Company Secretary and the
members consist of senior managers from finance, legal,
compliance and public and investor relations. It has responsibility
for considering the materiality of information and on a timely
basis, determination of the disclosure and treatment of material
information. The Committee also has responsibility for the timely
filing of reports with the SEC and the formal review of the
contents of GlaxoSmithKline’s Annual Report on Form 20-F.
CEO/CFO Certifications
Sarbanes-Oxley has introduced a requirement that the CEO and
the CFO must complete formal certifications, which require
confirmation that:
• they have reviewed the Annual Report on Form 20-F
• it contains no material misstatements or omissions
• the Financial statements and other financial information fairly
presents, in all material aspects, the financial condition, results
of operations and cash flows for the period under the report
• they are responsible for establishing and maintaining disclosure
controls and procedures that ensure material information is
made known to them and that they have evaluated the
effectiveness of these controls and procedures within the past
90 days, the results of such evaluation being contained in
the report
• they have disclosed to the auditors and the Audit Committee
all significant deficiencies and material weaknesses in the design
or operation of internal controls and any fraud (regardless of
materiality) involving persons that have a significant role in
the internal controls of GlaxoSmithKline
• they have indicated in the report whether there were any
significant changes in internal controls including any
corrective actions.
The CEO and CFO have completed these certifications which will
be filed with the SEC in the USA as part of the Group’s Form 20-F.
Evaluation of disclosure controls and procedures
Within the 90 days prior to the date of this report, the Group
carried out an evaluation under the supervision and with the
participation of the Group’s management, including the CEO
and CFO, of the effectiveness of the design and operation of
the Group’s disclosure controls and procedures. There are inherent
limitations to the effectiveness of any system of disclosure controls
and procedures, including the possibility of human error and the
circumvention or overriding of the controls and procedures.
Accordingly, even effective disclosure controls and procedures
can only provide reasonable assurance of achieving their control
objectives. Based upon and as of the date of the Group’s
evaluation, the CEO and CFO concluded that the disclosure
controls and procedures are effective in all material respects to
ensure that information required to be disclosed in the reports the
Group files and submits under the US Securities Exchange Act of
1934, as amended, is recorded, processed, summarised and
reported as and when required.
Related party transactions
GlaxoSmithKline held a 23 per cent interest in Quest Diagnostics
Inc. throughout 2002. This holding was reduced to 21 per cent
in February 2003 following Quest’s acquisition of Unilab
Corporation. In December 2002 GlaxoSmithKline and Quest
amended the terms of their Global Trials Agreement, which is
a long-term contractual relationship under which Quest is the
primary provider of clinical laboratory testing to support the
Group’s clinical trials testing requirements worldwide.
In February 2002, Mr Ingram, then a member of the CET,
purchased a portion of land being part of a residential property
owned by the Group that was adjacent to Mr Ingram’s own
residence. The total sale price was $16,500 based on an
independent valuation of the land. The Group subsequently
determined that retention of the residential property no longer
served its business needs and listed the property for sale. An
independent valuation of the property on 3rd June 2002 valued
it at $1,050,000 and the property was offered for sale through
an estate agent. Mr Ingram made the highest offer for the
property and purchased it from the Group for total
consideration of $1,070,000.
Documents on display
Documents referred to in this Annual Report are available for
inspection at the Registered Office of the company.